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Friday, 15 March 2013

RIL ready to relinquish merely 4,266 sq km of KG-D6 block

In contrast with the Oil Ministry’s demand to vacate 7,645 square kilometer in
the KG-D6 block, energy giant Reliance Industries Ltd (RIL) has agreed to give
up only 4,266 sq. km of the block, said the media reports. On a contractual
basis, companies are required to give up 25 per cent of the area in an oil and
gas block at the end of first phase of exploration that spans around three-year
period. On the completion of second phase, companies are required to relinquish
50 per cent of the area, while after third phase, companies are allowed to
retain only that area where some discovery has been made. The Mukesh Ambani-led
company along with its partner Niko Resources of Canada was awarded the
KG-DWN-98/3 or KG-D6 block in the year 2000. The three-year Phase-1 ended on
June 7, 2003 while the 2-year Phase-II and Phase-III exhausted on June 7, 2005
and June 7, 2007 respectively. However, in the year 2006, upstream regulator DGH
had agreed to RIL’s proposal of declaring the entire 7,645 sq km as discovery
area, allowing the company to retain the complete area, sources said. The
decision was sharply criticized by CAG as at the end of the third phase, only 79
per cent of the block area was covered by 3D seismic survey. In the 2011
performance audit, CAG had asked the Ministry to review the determination of
entire KG-D6 lock as 'discovery area'. Subsequent to the CAG criticism, the
Directorate General of Hydrocarbons (DGH) recommended that RIL should be
informed that an area of 5,970 sq km is treated as having been relinquished in
the first instance. However, the ministry had not yet served the relinquishment
order on RIL, sources added.